This article was featured in The Bulletin (Philadelphia-area newspaper) on 4/3/2009. Read the newspaper version here.

Let’s play a game – Name That Country. Round I: This country fought in the Cold War, restricts private enterprise, and threatens companies with the withholding of federal funds. Your answer…Russia? Yes! The United States? Yes! Round II: This country calls itself ‘democratic,’ assigns government officials to run specific industries, and directly appoints management for many of its domestic companies. Your answer…The Democratic People’s Republic of North Korea? Yes! The United States? Yes! Round III: This country has the color red in its flag, nationalizes banks, explicitly plans sectors of its economy, and takes over failing companies. Your answer…China? Yes! The United States? Yes!

Earlier this week, my wife called me and half jokingly said, “Have you heard what’s going on with GM? You have to write about this – I feel like I’m living in China.” I laughed, and then thought about it for a minute. Maybe this is more serious than the General Motors situation-maybe my wife’s tongue in cheek comment had a bit of truth to it.

What, after all, distinguishes the United States from the rest of the world? In many ways, it is our undying commitment to democracy, freedom, capitalism, limited government, and Constitutional rights. No other country has defended these principles as fervently and consistently as the United States. Behind them, we became the most powerful country in the world, the standard bearer of freedom, capital development, and human rights. Admittedly, our history is wrought with mistakes and departures from each of these essential elements. But we have always returned, because we have always recognized that what makes America distinct is what makes America successful.

So, when the government takes control of a hallmark American company like GM, and then proceeds to oust its CEO, it should be disconcerting. It started back in December, when GM and Chrysler received a total of $17.4 billion in government loans, and taxpayers absorbed the huge risk of failure for both of these companies. The normal investment structure, in which shareholders choose to take on investment risk in return for the possibility of profit, was turned on its head. American taxpayers had no choice-we took on the risk of investment and would not directly profit from any returns. At best, there was the indirect promise of overall economic growth and success if GM and Chrysler prevailed. At worst, our entire investment would be burned up by a pair of dying companies, representing one of the largest explicit wastes of taxpayer money in recent memory.

Similar to the bailout of AIG, it is important to note that investors would never choose to assume such heavy risk for so little return. Now, as these companies progress toward bankruptcy, this money may be lost altogether. The companies’ recent request of another $22 billion in aid would only further leverage this public risk.

This is first infringement on the American identity: Government choosing where its citizens’ money is invested and exposing them to risk without choice. Essentially, the government is saying that they know what to do with your money better than you do.

The second great infringement comes with the forceful exit of Rick Wagoner, GM’s now former CEO. You shouldn’t feel bad for Mr. Wagoner, as he will collect an estimated $23 million in pension payouts from GM, and his performance at the helm of GM was hardly successful (GM’s shares dropped from $70 a share to $3.62 during his tenure). You could easily make the case, and many have, that Mr. Wagoner’s departure will benefit the company in the long run.

That, however, does not validate the government’s intervention in GM’s management structure. When the plan was initially proposed by the Bush Administration, it was meant as a structured loan. GM was supposed to come up with a plan to remake itself, and the government would review the plans and consider additional loans. The Obama Administration took it a step further, forcing out Mr. Wagoner by threatening a restriction of additional funds, forming a special planning committee to regulate all decision points at GM, and increasing the burden of environmental and CAFE standards.

The Obama Administration, as it has demonstrated time and time again, wants tight control over society, industry, and private capital. Combined with the pork-laden stimulus and liberal budget proposal, President Obama’s actions chart a classic course of socialism and government control. The GM situation is simply the latest notch in the President’s belt.

If this continues, we risk losing the identity that makes us American. But if our history holds its course, the American people will recognize this departure. We will rise together to elect new leaders who understand that what makes the United States different is what makes it great.

 -Matt Benchener from TruPolitics.net